Relief as pension regulator claws N326m from defaulters in Q3

More retirees have heaved a sigh of relief from the non-remittance of their pension contributions by their employers, whose default marred their retirement.

The pension recovery agents appointed by the National Pension Commission (PenCom) recovered additional N326.6 million of workers’ unremitted employer-employee contributions in the third quarter of last year, comprising principal contributions of N276.52 million and penalties amounting to N49.64, from 24 defaulting employers.

From the commencement of the recovery exercise in June 2012 to 30 September 2023, a total of N25.13 billion has been recovered from defaulting employers, comprising principal contributions of N12.80 billion and penalties of N12.33 billion, according to data from PenCom.

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In Q3 2023, five defaulting employers were referred by the agents to the commission’s secretariat/legal advisory services department for prosecution.

Section 11 (6) of the Pension Act 2014 states that any employer who fails to remit the contributions within the time prescribed shall, in addition to making the remittance already due, be liable to a penalty to be stipulated by the commission.

The penalty, according to the pension law, shall not be less than 2 percent of the total contribution that remains unpaid for each month, or part of each month that the default continues, and the amount of the penalty shall be recoverable as a debt owing to the employee’s retirement savings account as the case may be.

Chukwuemeka Iloh, a retiree and former employer of a textile mill company in Ilupeju area of Lagos, said what pension recovery agents are doing is commendable and this should be encouraged so that workers can have something to fall back on when they retire.

“I was not fortunate enough to get this opportunity because I lost all my entitlements in my company as at the time I was retiring in 2019,” he said.

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According to him, his pension contributions were not regularly remitted to the Pension Fund Administrator while he was working, and as of the time he was leaving the job, the company was no longer able to meet its obligations, including salaries and pensions. “So, we were retired with promises that never came to pass and as we speak, the company has shut down operations since three years ago.”

He said the death of the company now means their pension was gone and the recovery agents could not come to their aid.

PenCom said it processed and issued Pension Clearance Certificate (PCCs) to a total of 6,053 organisations that met the requirements for issuance in Q3 2023, and the sum of N35.9 billion was remitted into the Retirement Savings Accounts (RSAs) of 98,887 employees of the 6,053 organisations issued the PCCs.

This measure, according to the commission, is part of its effort to enhance compliance by employers of labour as those without the certificate cannot participate in any federal government contract.

PenCom said this policy is domiciled with all government agencies and enforced by the Bureau of Public Procurement.

Paddy Ezeala, a pension and environmentalist expert, said pension remittance is critical to the sustainability of the reform process, and underscores the importance of continued awareness creation and enlightenment.

Ezeala noted that the pension system is the only social safety net that is available for a worker in Nigeria, so compliance by all stakeholders particularly employers is very important to the realisation of the objective of the scheme.

“Though times are hard, my advice really is that employers should take employees’ pensions very seriously because that is a key motivational factor in enhancing productivity,” he said.

Aisha Dahir-Umar, director-general of PenCom, had reiterated the need for employers to make prompt remittance of their workers’ pension deductions.

Dahir-Umar said employers are expected by Pension Reform Act to ensure the remittance of pension contributions of employees into their RSAs within seven days of salary payment. “Pension contributions are expected to be remitted into the RSAs of employees within seven days of salary payment,” she added.

For pension to be smart, employers are also expected to open nominal RSAs for an employee who refuses to open their own and once the nominal RSA is opened on behalf of such an employee, the employer is expected to commence pension contribution remittance into the account until the employee opens one.